Energy Fuels' Q4 Earnings Coming Up: How Should You Play the Stock?

Energy Fuels Inc. (UUUU) is about to release its fourth-quarter 2024 earnings results later this month. Initial expectations point to higher revenues and a return to break-even earnings.

The Zacks Consensus Estimate for Energy Fuels' fourth quarter indicates break-even earnings, a notable shift from the loss of 13 cents per share reported in the same quarter last year. This estimate has remained constant for the last two months.

The expected revenue for the fourth quarter is set at $45.25 million, which is a significant increase from the mere $0.47 million reported during the same period last year.

Energy Fuels’ Earnings Surprise History

In the previous four quarters, Energy Fuels has managed to beat the Zacks Consensus Estimates in two instances, while it fell short of estimates in the other two. On average, the company has faced a trailing four-quarter negative earnings surprise of 85%.

Insights into UUUU Stock Performance

The analysis tools available indicate that predicting an earnings beat for Energy Fuels this time is not definitive. Typically, a positive Earnings ESP along with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the likelihood of an earnings surprise. Unfortunately, this is not applicable in the current scenario.

Earnings ESP: Energy Fuels holds an Earnings ESP of 0.00%, meaning expectations for earnings are neutral.

Zacks Rank: Currently, the company holds a Zacks Rank of 3, indicating a neutral position.

Key Factors Affecting Q4 Performance

Energy Fuels temporarily halted ore shipments from its Pinyon mine in Arizona due to concerns from the Navajo Nation regarding the transportation of radioactive materials. Despite this, mining operations continued, with the ore stockpiled for future shipments. As a result of this situation, the anticipated uranium production for 2024 is now projected to range between 150,000 to 200,000 pounds, a decrease from the originally stated goal of 150,000 to 500,000 pounds.

In a positive development, Energy Fuels recently signed a crucial agreement with the Navajo Nation Justice Department and the Navajo Nation Environmental Protection Agency, paving the way for ore transport to resume in February.

At the start of the fourth quarter, Energy Fuels had an inventory of 235,000 pounds of finished uranium, along with 805,000 pounds of uranium ore. Additionally, the company had 905,000 pounds of finished vanadium and 38 tons of neodymium praseodymium in its inventory. They also held 9 tons of partially processed rare earth carbonate.

For the first quarter of 2024, Energy Fuels sold 200,000 pounds of uranium under long-term contracts at a price of $75.13 per pound. However, with no new contract sales expected in the fourth quarter, the company is likely to sell a portion of its inventory in the spot market during this period. In the first three quarters of 2024, Energy Fuels managed to sell 250,000 pounds of uranium at an average price of $91.51 per pound, particularly capitalizing on higher prices in the first quarter.

Overall, expected uranium sales for 2024 should be lower than the notable 560,000 pounds sold in 2023, suggesting that around 110,000 ounces of uranium sales are likely for the fourth quarter of 2024. It's also worth noting that uranium spot prices averaged $76.75 per pound during this quarter, reflecting a 7% decline compared to the previous year, which will impact Energy Fuels' revenue for Q4.

Sell expenses, general and administrative costs are anticipated to rise due to increases in salaries and benefits associated with its expanding workforce aimed at business growth.

Stock Performance & Valuation Insights

Energy Fuels' stock prices have declined by 23.2% over the past year, contrasting with the industry's growth of 10.6%. In this timeframe, the Zacks Basic Materials sector and the S&P 500 have increased by 0.7% and 23.2%, respectively.

Comparing Price Metrics

The UUUU stock is currently trading at a forward sales multiple of 5.98, which is considerably higher than the industry average of 2.80. Nonetheless, it remains cheaper compared to peers such as Cameco (CCJ), which trades at 8.37, and Uranium Energy (UEC), which has a price-to-sales ratio of 21.34.

Investment Considerations for UUUU

With a debt-free balance sheet, Energy Fuels is escalating its uranium production while also enhancing its rare earth element (REE) capabilities in response to increasing clean energy demands. The recent acquisition of Base Resources Limited aligns with its objective to become a top global producer of REEs. Additionally, Energy Fuels boasts strong mineral resources and a portfolio of high-quality development and exploration projects that give it a competitive edge.

Furthermore, Energy Fuels has entered into the medical isotope sector through its acquisition of RadTran LLC. This move enables them to recover valuable isotopes from their processes, addressing the global shortage of isotopes critical for cancer treatment.

Should You Consider Buying Energy Fuels Stock Now?

The anticipated impacts from uranium sales are expected to be reflected in the upcoming quarter results. Although uranium prices have seen a decrease this year, this trend is viewed as temporary due to persistent supply pressures and positive demand fundamentals, indicating a potential rise in prices moving forward. Energy Fuels is actively making investments to scale up its capacity in response to the growing demand for uranium and REEs, driven by clean energy trends.

Despite its higher valuation metrics, UUUU remains a promising stock for investors looking to benefit from the robust long-term fundamentals present in the uranium market.

Energy, Earnings, Investing